By many measures, the U.S. oil industry should be having a great year.
It is emboldened by higher crude prices, a White House favoring deregulation, and improving energy demand. But the industry has a different sort of challenge — to not drill too much.
With the relative boom in oil prices, despite recent fluctuations, investors are judging companies more by their balance sheets and do not want to see overexpansion.
"[Companies] could be sowing the seeds of their own demise. They're going to be called to task by their lenders and shareholders at some point," said John Kilduff, founding partner of Again Capital. "They don't have the infinite runway the high-tech companies of Silicon Valley had."
The recent stock market sell-off has not been kind to energy stocks. For the month of February, the S&P energy sector was down 11.3 percent, its worst monthly performance since September 2011.
"I think there's a new game. It's no longer just about production growth. It's also about return to shareholders, and I think the companies have heard them," said Daniel Yergin, vice chairman of IHS Markit, which hosts its annual CERAWeek conference in Houston starting on Monday. "It's a different metric than it was even a year ago."